Web3 is a new decentralised web based on the blockchain, which allows users to use Internet applications while retaining ownership and control of digital assets related to their online identity, starting with usernames, personal data, cryptocurrencies, certificates and any content created or purchased online.
The protocol used can be supported by the tokens or cryptocurrencies themselves. Behind every Web3 project is a DAO (Decentralised Autonomous Organisation) community, where everyone has voting rights (in proportion to the tokens held), to direct policy, through smart contracts concerning decisions and actions on a group of resources (tokens). In Web3, activities and interactions are no longer mediated by the oligopolistic platforms of Web 2.0, but occur directly between users.
The infrastructure
The blockchain is a distributed ledger of transaction information in a network (values, content...), encrypted in an immutable manner in 'blockchains', proven and stored by the computers that are part of it. The exchanges of cryptocurrencies, the possession of non-fungible tokens and the functions of smart contracts are certified by the protocol, without delegating trust to a third central authority, thanks to the infrastructure's properties of distribution, cryptography, immutability, tokenisation and decentralisation.
Web3 applications are decentralised (dApps), since they refer to a network of nodes and not to a centralised server or platform, making the 'hierarchical' difference between customer and server disappear.
To access the blockchain, each user must have a wallet, where he or she stores and manages digital data and property. All it takes is one password for a single anonymous digital identity, with which one can interact on several dApps without creating every time a new profile and a new password for each web services platform where the user comes to be engaged.
The projects
Web3 hosts innovations such as the Metaverse and could absorb Web 2.0 platforms. The biggest developments so far have involved decentralised finance (DeFi, Internet of Value), 'play to earn' gaming, crypto-art and collectibles marketplaces where the role of non-fungible tokens is enhanced. This tool is already being used in marketing strategies, while smart contracts can have functions in the legal and insurance fields.
Among social media networks, there are several initiatives such as Bluesky, started by Jack Dorsey, founder of Twitter, for 'a federated social network', based on an open standard (AT protocol), which can be adopted by multiple platforms. Music can be disintermediated from record companies, opening up new revenue channels for artists to protect copyright.
The 'attention economy' of Web3 subverts the 2.0 business model, free but based on the collection of user data, to the detriment of privacy. Brave is a browser with an integrated wallet, backed by the cryptocurrency Basic Attention Token, which you can earn by surfing and choosing to view ads. Tokens can be reused in different ways on the web.
The numbers
- 2,033, the Web3 initiatives surveyed globally between 2016 and 2022
- +13%, the increase in blockchain projects (278) identified in 2022
- 28%, the share of Internet of Value applications, compared to the total
- 111, decentralised web projects with dApp and NFTs in 2022 (+98%)
(data from the Blockchain & Web3 Observatory of the Polytechnic in Milan).
The theorists
Gavin Wood was the first to formulate an idea of Web3, after the disclosures revealed by Edward Snowden, in 2014. According to the co-founder of Ethereum, the case showed that the Internet model based on handing over one's data to intermediaries and arbitrarily relying on the decisions of third parties at the helm of large platforms in an oligopoly regime was inefficient.
Web3 is back in the news as of 2021, with the crypto-boom. Chris Dixon, crypto investment manager at Andreesen Horowitz, posted a thread on Twitter, which went viral, explaining that Web3 is ‘the Internet owned by those who build and use it, orchestrated with tokens’, such as NFTs, in fact a ‘unit of Internet ownership’.
Tim Berners-Lee himself, the founder of the Internet in 1989, came up with a new idea of a decentralised Internet, which, however, does not exploit the blockchain. The Solid project developed together with MIT in Boston aims ‘to change the way current web applications work, to achieve real data ownership and better privacy.’
Pros
- Identity, digital ownership, data privacy and personal profile reputation remain in the user's control, even in the event of platform shutdown, censorship, policy or algorithm change, and follow the user through different blockchains and apps, thanks to the interoperability principle
- Direct and disintermediate revenue lines for creators and artists
- Resistance to censorship by third parties or state authorities
- Security by design
- The main blockchain used for Web3, Ethereum, has adopted the Proof of Stake consensus system, which reduces energy consumption by over 99%
Cons
- User experience still complex
- Information asymmetry, regarding technical and financial knowledge
- Doubts about the technical scalability of blockchain
- Risks of concentration of tokens in favour of promoters in Web3 projects
The expert
“The trend is taking us towards Web3, but we do not yet know whether in pure form or only with elements of decentralisation added to Web 2.0, maintaining a certain degree of intermediation,” explains Giacomo Vella, director of the Blockchain and Web3 Observatory at Milan’s Polytechnic University
“There are three elements for Web3 progress. The first is the possibility for users to have regulated and secure wallets for managing self sovereign identity, the control over the information used to prove one's identity to sites, apps and online services, with certificates and official personal documents. The second is that of payments with regulated and secure currency from a regulatory point of view; the adoption of Internet of Value tools on blockchain is increasingly regulated and accepted. This would open up more possibilities for companies to develop and offer services that encourage the adoption of such tools. Interesting projects have been done by Telepass and Starbucks, however, in order to come out to an already 'skilled' audience, a good UX that allows the average user not to have to interface with certain technical aspects will be decisive in general.”
“Those with more capital (joint ventures, Big Tech...) will have more control in the development of products and services. However, the blockchain means that there are no longer lock-in phenomena in the services used, not even in exchanges. This opens up more competition between service providers than Web 2.0. In addition, knowing more about blockchain and Web3 may offer an assist to regulators in limiting centralisation to actors such as so-called 'Gafa', whose activities may be at odds with the interests of users and states, helping to shift components of web interactions to an infrastructure that would no longer be in the control of individual actors such as some private companies.”